British bank Barclays promises "rigorous" pay review

Steve Slater

3 Min Read

LONDON (Reuters) - Barclays (BARC.L) promised a rigorous review of executive pay and a cooperative relationship with regulators as it tries to dispel a reputation for reckless risk-taking and unethical behavior that caused a series of scandals.

The logo of Barclays bank is seen at its office in the Canary Wharf business district of London April 1, 2013. REUTERS/Chris Helgren

The British bank said on Wednesday it would reform its standards and culture, from improving coordination within its executive team to forcing all staff to attend a course on the company’s new values.

It follows a report commissioned by Barclays and written by veteran lawyer Antony Salz on how to improve standards after the scandals over rate-fixing, mis-selling of financial products and inflated investment banker bonuses.

Barclays said Salz’s report and 34 recommendations made uncomfortable reading.

New Chairman David Walker and Chief Executive Antony Jenkins have pledged a more ethical approach at Britain’s third-largest bank and are trying to distance it from the aggressive, high-risk culture championed by former CEO Bob Diamond.

They also say they will rein in excessive pay, but their reponse to the Salz report did not say precisely when or how that would happen.

“The remuneration committee recognises that these are not one-off changes and that the path to reposition our remuneration is a multi-year journey,” Barclays said in its response to Salz.

The board and remuneration committee will consider changes “to ensure the rigorous review of remuneration proposals for high earners” and more simplicity and transparency for long-term share awards, Barclays said.

Salz said pay for the top 70 executives at Barclays was consistently above the average at other banks. The bank has been condemned by politicians for paying 428 of its employees 1 million pounds or more in 2012.

In a nod to criticism that executives or board members did not stand up enough to Diamond, the Barclays report said action would be needed to ensure that “the role of the CEO in encouraging open debate and challenge is fulfilled”.

Barclays said it would also respond to criticism that it has had a strained relationship with regulators, insisting its goal was to become a model for constructive engagement.

It promised to publish an updated code of conduct, improve communication with shareholders, set up processes to better learn from past mistakes and ensure retail sales incentives did not encourage behavior that conflicted with customer needs.